Working Paper: NBER ID: w13025
Authors: Hilary W. Hoynes; Diane Schanzenbach
Abstract: Economists have strong theoretical predictions about how in-kind transfer programs -- such as providing vouchers for food -- impact consumption. Despite the prominence of the theory, there has been little empirical work documenting actual responses to in-kind transfers. In this work, we leverage previously underutilized variation in the date of the county-level original implementation of the Food Stamp Program in the 1960s and early 1970s. Using the Panel Study of Income Dynamics, we employ difference-in-difference methods to estimate the impact of program availability on food spending, labor supply and family income. Consistent with theoretical predictions, we find that the introduction of food stamps leads to a decrease in out of pocket food spending, an increase in overall food expenditures, and a decrease (although insignificant) in the propensity to take meals out. The results are quite precisely estimated for total food spending, with less precision in estimating the impacts on out of pocket food costs. We find evidence of small work disincentive impacts in the PSID, which is confirmed with an analysis of the 1960, 1970 and 1980 Census.
Keywords: Food Stamp Program; In-Kind Transfers; Consumption; Labor Supply; Family Income
JEL Codes: H31; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Food Stamp Program (FSP) introduction (I38) | decrease in out-of-pocket food spending (D19) |
| Food Stamp Program (FSP) introduction (I38) | increase in overall food expenditures (Q11) |
| Food Stamp Program (FSP) introduction (I38) | decrease in propensity to eat meals out at restaurants (D12) |
| Food Stamp Program (FSP) introduction (I38) | small work disincentive effects (H31) |
| Food Stamp Program (FSP) income (I38) | marginal propensity to consume food (D10) |